Starbucks drinks to 5 years in Japan

Anniversary message stresses good corporate citizenship

BillClifford

TOKYO (CBS.MW) -- How does a multinational retailer with one of the most potent brands celebrate a business milestone in the age of globalization?

For Starbucks, which marked its fifth anniversary in Japan on Thursday, another gala store opening just wouldn't do.

After all, the Seattle-based purveyor of specialty coffees
SBUX, +0.17%
and its Japanese joint-venture partner Sazaby open an average of two coffee shops a week here -- routine for Starbucks' best performing market outside North America.

Marketing mementos? Little time to spare for that.

Sure, at the back of the press kit, there was mention of Swatch-made commemorative watches with the Starbucks green-and-white siren logo. No doubt the 5,000 limited-edition watches will sell out faster than iced lattes at Starbucks Japan's 273 stores. They'll be more memorable for the inflated prices they'll fetch on auction Web sites.

But Starbucks aimed to draw attention to its first five years of rapid business growth in Japan in a loftier way: with a shot of corporate social responsibility stirred in with the introduction of new coffee products.

Such is the pressure on coffee companies -- most recently from some protestors who disrupted the Genoa summit of the Group of Eight industrialized countries -- to improve the livelihoods of coffee farmers while ensuring environmentally sustainable agriculture.

As part of Starbucks' commitment to origins program, Panama San Benito coffee purchased this year will be sold exclusively in Japan, starting in October. A portion of the proceeds from sales of the beans to Starbucks (but not from coffee sales to Japanese consumers) will go to a vocational school nearby the farm in Panama, said Deidra Wager, Starbucks chief retail officer.

Shade Grown Mexico coffee will be sold in Japan from next month. A project with Washington, D.C.-based Conservation International has offered funds and technical support to farmers in Chiapas to protect the biodiversity of the last cloud forest in southern Mexico and enable them to increase their coffee sales and earnings. A shady forest canopy reduces the need for chemical fertilizers and pesticides, protects crops and provides a habitat for wildlife.

Orin Smith, president and CEO of Starbucks, said the company is expanding the partnership with Conservation International to four other coffee-growing countries.

"This project isn't charity, it's about business," Smith said in an interview in Tokyo. Starbucks counts on supplies of high-quality coffee for its specialty brews, and those supplies are at risk if the rainforests disappear.

"The single greatest risk to biodiversity in that part of the world is poverty not ignorance," Smith said. Farmers understand conservation, "but when a family's livelihood is at stake you eat the rainforest."

Eco-activists may not buy the idea that Starbucks, given the fortune it's earned, is doing enough for coffee growers. With coffee prices in a long tailspin, many farmers are hard-pressed to earn in a day what a cup of premium coffee costs in Japan, North America or Europe.

But will Starbucks' efforts at being a good global citizen matter to customers? Does it strengthen the brand?

Starbucks executives believe so, eventually anyway. For employees take pride in serving products like Shade Grown, executives say, and if that translates into better customer service and education it will reflect well on the brand.

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